Today, Central and Eastern Europe (CEE) finds itself at an economic crossroads that is as much fraught with peril as it is rich with possibility. Taken in sum, these recent developments signal reversals in fiscal policies, growth expectations, and inflation across the entirety of West Africa. Just in late July, Fitch Ratings downgraded Poland’s economic outlook from stable to negative. By contrast, their neighbors such as Czechia are very seriously working towards fiscal expansion, in Czechia’s case to boost its hotspot economy.
On September 30, Fitch Ratings, a global leader in credit ratings, followed suit by downgrading Poland’s outlook to negative over worries about its fiscal sustainability. This change to a negative outlook signals fears about economic growth and the identification of possible weaknesses in the Polish economy. Czechia has recently pledged fiscal expansion to spur growth in the wake of uncertainty about cooling growth in the region.
At the same time, Serbia and Slovakia have seen the biggest negative revisions to their expected growth forecasts. Analysts expect Serbia’s economic growth to remain below 3% in 2025. So far this year, the country is experiencing strong growth momentum around 2% in the first semester. For Slovakia, as an example of a national coalition, it’s to grow by under 1% by 2025. This state of affairs further highlights the economic strains that these countries are facing.
In response to these economic challenges, CEE countries have all taken measures, albeit to different degrees and levels of success. The region has implemented a flat fare of 15% tariff. This step is accompanied by detailed provisions aimed at minimizing the adverse effects on trade and investment. These measures are incredibly important. Other countries in the region, such as Peru and Chile, are feeling the economic pain of rising inflation and stagflation.
Even though it is faced with these challenges, the CEE region should see above-average growth in the coming year. There is broad consensus among analysts that previous economic recessions have inflicted demonstrable, long-term damage. They think the direct bad news effect in 2026 will be somewhat limited. This sentiment suggests a gradual recovery, as countries adapt to new economic realities.
Romania and Slovakia are going even further, preemptively adopting sets of austerity measures in order to avoid what they see as imminent crises and shore up their economies. Romania’s forecast indicates a modest growth rate of 1.3%, reflecting ongoing challenges, while Slovakia’s austerity measures are part of a broader strategy to address its economic hurdles.
Croatia is an exception and a true example of good practice among the CEE region. Its economic resilience is, therefore, an increasingly informative case study for other countries wrestling with these same problems. As the region looks towards recovery, Croatia’s success could serve as a model for strategic fiscal policies and growth initiatives.
Looking into the medium and long term, inflation is still a big worry for almost all CEE countries. Out-year forecasts indicate average inflation in 2025 will be marginally higher than it has been this year or last. Though inflation is still expected to be high in 2026, creating a more challenging context for growth.
Poland remains cast and acting as a regional leader. Poland continues to expect robust 3.4% growth this year. With projections indicating it will stay above 3% in 2026, it’s on track to be the fastest-growing economy in Central and Eastern Europe. This remarkably increasing trend indeed highlights the tremendous impact that focused economic policies and targeted investment programs can create.